Every company operating in the oil and gas business industry has its own unique risks and concerns to deal with. Some contractors work on land, others on water, while many of them perform work on land and water. Some deal strictly in drilling while others perform well servicing as their primary function.
Whether your company stimulates wells, or does what is referred to in the business as “Plug & Abandon” work, you all face similar exposures when it comes to injuries and other liability issues. The need for nm gas and oil insurance to cover your operations in the event of accidents is one of the main reasons for acquiring coverage.
The oil industry has many functions
In addition to the jobs listed above, contractors also build, install, maintain or repair platforms and facilities. While it is a fact that most oil and gas operators have wells, the depth, structure and location of each greatly differ from one another. The concerns and needs will therefore vary and any insurance program must recognize the differences and challenges for every company within the scope of this industry.
For example, if vessels are owned or chartered there is a different set of concerns that need to be addressed within the marine insurance market (Hull/P&I). The necessity for coverage expands if aircraft are involved in the operations.
In the case of a “well out of control”, definitions may vary from company to company, with the use of such phrases as unexpected, or sudden or accidental. In most cases this phrase refers to some incident caused by extraneous pressure from outside the circulating system. The cost of a clean up can be in the millions and insurance is the only way to properly mitigate any unforeseen circumstances.
There is much to consider in developing an appropriate insurance program for oil and gas operators and contractors. Agents and brokers need to fully understand the insured’s risk management philosophy, with the power to present a true exposure picture to underwriters, and the ability to negotiate favorable terms and conditions for any nm oil and gas insurance program.